Airbnb, New York settle suit on short-term sublet law

Airbnb Inc. settled its lawsuit against New York state over a new law restricting short-term rentals, with both sides agreeing that New York City, not the state, is responsible for enforcing it.

Airbnb and New York Attorney General Eric Schneiderman agreed in court papers filed Tuesday that the state would be dismissed from the suit. A lawyer for the city told U.S. District Judge Katherine Forrest in a letter on Friday that the parties are discussing a resolution of the case and will update her on their efforts by Dec. 2.

The new law prohibits advertising of short-term rentals — less than 30 days — with violators facing fines of as much as $7,500. Hours after Governor Andrew Cuomo signed the bill into law on Oct. 21, Airbnb sued the city and the state claiming the restrictions were unconstitutional and infringed its free-speech rights.

“We have long sought to work with leaders in New York on clear, fair rules for home sharing, and we’re continuing to do all we can to protect the thousands of middle-class families who depend on home sharing to earn a little extra money,” Airbnb spokesman Peter Schottenfels said in a statement Tuesday.

Legal Challenges

Airbnb is fighting local rental regulations throughout the U.S., driven by opposition from the hotel industry and cities, which stand to lose revenue from hotel occupancy taxes. The company faces a legal challenge in San Francisco, where it sued to block enforcement of a law that would penalize Airbnb for hosts who use the site to book rentals of unregistered units. After Airbnb lost an initial ruling, that case is on hold while both sides negotiate.

Both the state and city of New York said last month they would hold off enforcing the new law until Airbnb’s suit is resolved. New York is Airbnb’s largest U.S. market.

In response to the city’s letter on Friday promising a Dec. 2 update, Forrest wrote: “We are running out of runway and will get things moving forward shortly.”

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